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Gross Profit % - Improvement
Gross Profit % - Improvement
Matt Fox avatar
Written by Matt Fox
Updated over a week ago

Potential Profit & Cash Formula: Additional gross profit % x current revenue

I've put a side by side view of the future numbers (left screen) and current numbers (right screen) to show where the figures come from. Both of these dates are set to June 2023 in this example (red button). Gross Profit % is 45.81%

The relationship between revenue and gross profit % can be shown here. In this example, for every 1% improvement, the potential profit and cash will increase by £4,667 because it is 1% x £466,677.

Gross profit has a relationship with revenue that when you pull the revenue and gross profit % levers, the gross profit % continues to adjust by taking into account the revenue improvement.

A 1% improvement to the gross profit yearly target of 45.81% to 46.81% is £4,667 which is 1% of current revenue (£466,667). If I keep my revenue improvement as it was, £100,000 and improve my gross profit by 1% too, then my potential improvement for gross profit jumps from £4,667 to £5,667 which is 1% of the £100,000 increase in revenue (£1,000). This is then added to the base line gross profit improvement of £4,667 before improving the revenue.

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